President’s Annual Dinner speech – 26 November 2013

Minister, my Lords, distinguished guests, Ladies and Gentlemen.  And that’s just the people sat at my table, all the great and good are here tonight!

It’s my great pleasure to welcome you to the 97th SMMT Annual Dinner, here at the Grosvenor House Hotel.  In those 97 Annual Dinners, an estimated 211 tons of food and 4,850 gallons of alcohol will have been consumed.  Again, that’s just the people sat at my table!

Today represents some well-known anniversaries; in 1922, Howard Carter and his team first opened the doors of Tutankhamen’s tomb, which had been sealed for over 3,000 years.  Walking in here just a few minutes ago, I know how they must have felt….huge excitement, some trepidation, but they knew there was a great story to tell.

Our industry has changed more than we dared to imagine.  Just 10 years ago today, Concorde, flew for the last time.  For many, it was a symbol of British pride in engineering, design and innovation.  Its passing felt like the end of an era, the UK just couldn’t cut it any more.

However, as stated by a senior industry CEO recently, vehicle technologies have the potential to push the motor industry further forward in the next five years than in the past 100.

Yet who would have predicted such a short time ago that tonight our industry would be celebrating significant growth, investment and global success.
It is helping create thousands of new jobs, safeguarding many more and rebalancing the UK economy.  Because when the UK automotive sector does well, the UK economy does well.

We started the year a little worried; a new 13 plate; would it be unlucky?

But seriously, that worry didn’t materialise and we’ve had the best footfall through our dealerships for many years.  New car registrations have exceeded forecasts and September was the best month for five years.

The market is up by 10%.  Growth that, we believe, is sustainable.  But we do not want a market artificially stimulated by over-stretched credit.  Consumers are becoming more confident but it is a cautious optimism, borne of a painful crash.

Europe provides a salutary reminder of the challenge.  The EU market remains depressed with car sales down 5% this year. Inevitably, this will impact on production levels here but we are hopeful that some signs of recovery are slowly emerging.

Closer to home, the signs are more positive.

Nowhere were the effects of the crash felt more than in the commercial vehicle market.  Hit hard by businesses reining in spending, CV sales fell dramatically with no scrappage scheme to alleviate the fall.

I am pleased to say that the market is recovering slowly.

There is greater confidence and business cycles are turning in our favour with new smaller CVs increasing sales.  At the other end of the market, the impending ‘Euro 6’ legislation is helping the recovery in larger truck sales.

Innovation is key to this recovery.  Innovations in safety, entertainment and, of course, fuel economy are attracting people back into the market.  Buyers realise that they can save pounds at the fuel pump by investing in a new vehicle.

The retail market too is changing.  Online has its place, and the customer is more informed than ever before.  We have to respond; making the experience transparent, engaging and responsive to individual needs and desires.

I think it’s a good thing.

Because buying a car should always be about satisfying that desire.

Earlier this year we celebrated 100 years of manufacturing in Oxford and I wonder just what William Morris would make of our industry if he was here tonight.   We have seen an impressive array of investments, from Nissan and BMW to Bentley and JLR which continues to invest to make the UK its production and technological home.

But the good news goes much deeper.  Brose, for instance, which makes window regulators and seat adjusters, is investing £15 million in its Coventry facility, taking its workforce to 250 employees.  ElringKlinger, which makes engine components, announced a £7m expansion in Redcar.

Both are relatively small investments which fail to make the headline news, but their success is just as important to the long term success of the UK industry.

Whilst we should recognise the loss of the Southampton Transit site last year, we have seen a modest increase in overall vehicle production, with bus and coach production bouncing back too.

The same can be said of our engine plants.  BMW has been investing in its Hams Hall engine site; the new JLR engine developments will be online in the next few years; and Ford continues to make the UK its focus for engine production.

With the full impact of many of the recent investment announcements yet to be realised, the UK is set for record volumes.  Not many would have bet on that over the last couple of decades.

The priority now is to ensure this confidence translates into a strong UK automotive supply chain.  There are billions of pounds worth of opportunities arising from the recent OEM investments. The SMMT is doing what it can to break down the barriers including funding constraints, so that the UK supply chain can prosper at home and abroad.

Fundamental to the UK sector’s future, is R&D.  We want jobs; we want growth.  But we also want innovation; high tech jobs that make the most of our knowledge economy.

In a few minutes, we will announce the winner of the SMMT Award for Automotive Innovation.  I will not spoil the surprise but let me say the competition was tough, it was challenging and it was inspiring.  The variety and expertise of innovation coming from these shores augurs well for our future.

But there remain challenges.  The biggest of which is Skills; making sure the UK has the necessary skillset to meet the challenge of competition in this global industry.

I am proud that our sector is leading this challenge, with trailblazing apprenticeships and pioneering initiatives such as ‘See Inside Manufacturing’.

After dinner, the Autocar/Courland ‘Next Generation Award’ winner will be announced and I know the calibre of entrants has been extremely high.  It’s great to have young people who really aspire to be the best.

But the need for more young people and women in our industry is just one of the challenges we must meet.  There are more; rising costs, regulation, increase competition.  All these and more threaten the competitiveness of the UK industry.

So it was with huge enthusiasm that the government and industry launched an Automotive Sector Strategy in July.  This forms part of a cross-government Industrial Policy for Growth.

On behalf of the industry, I would like to thank the many people here this evening who have invested considerable amounts of time in creating the strategy, not least the Automotive Council, the Department for Business, Innovation and Skills and countless individuals.  I am convinced this strategy can deliver the global competitiveness essential for our success.

And our focus now has to be on delivery. As an industry, we must make speedy progress on the Advanced Propulsion Centre; we must create more apprenticeships and graduate positions, and we must create and deliver the new technologies that will make the UK a leader in automotive innovation and market take-up.

It can also help us attract yet more investment.  I was delighted to see the appointment of Joe Greenwell, a former SMMT President, as CEO of the newly formed Automotive Investment Organisation.  I cannot think of a better man to represent the industry and he has the full support of the SMMT.

These initiatives reflect the strong collaborative relationship between industry and government.

Typical of this is the partnership between the Department for Transport and some major brands that will see a communications campaign next year to encourage motorists to consider ultra-low emission cars.

I am pleased that BMW is part of that consortium and am confident we will see more motorists considering electric and ultra-low carbon vehicles in the future.

Low emission vehicles are part of a wider objective to meet CO2 emissions targets set by the EU.  Every manufacturer is committed to achieving these targets, but, we are also mindful of the need to maintain competitiveness.  Breakthroughs do not come every year.

And customers do not suddenly decide to embrace new technologies.  We will get there, but we ask regulators to ensure the European industry can maintain its competiveness for current, and future, challenges.

I know we have representatives from various government departments here this evening as well as the Department for Transport.  I would like to thank them all for their efforts to safeguard the UK industry’s interests.

However, I must also raise with them an issue affecting many in this room.  We all want efficient and effective public services. Modernisation is central to that ambition.  But dealers, manufacturers and consumers are all suffering from costly and unnecessary delays from the modernisation of DVLA, VOSA and VCA.

The new Transport Minister, Robert Goodwill MP, is with us tonight and I know is aware of this issue. I would like to place on record our determination to work with him and our Agency colleagues to find appropriate solutions.

This is part of the role of the SMMT.  To ensure the industry, and those affected by it, are as successful as possible.

I am pleased to say the SMMT is in good health.  Membership levels are strong with over 100 new members signed up this year.  And it is a diverse, extensive and active membership.

Of course, there have been changes.  Just after our dinner last year, Paul Everitt announced he was to leave and join the aerospace industry.  He went with our best wishes given the instrumental role he played in modernising the SMMT.

I was delighted, however, that we were able to recruit a very able successor in Mike Hawes, who joined in September.

He has considerable experience of the industry and has already spent a lot of his time out there meeting industry, politicians, other organisations and I am convinced he will be a great leader of the organisation.

Mike Baunton served as interim Chief Executive of the SMMT after Paul’s departure.  He kept a firm hand on the tiller and so on behalf of the Society, and on behalf of the Executive Committee, I would like to thank him for his service this year.

But the SMMT is not just about the CEO.  It has a great team beavering away on behalf of the industry.

I have spent a fair amount of time at SMMT’s Great Peter Street offices and I am always so impressed at the passion, determination and expertise of all the staff.

They ensure we have all the data we need, (whether we like our market share or not); they get a whole lobby of politicians to support our sector (which is no mean feat and I can assure you is all above board.) and generally present the industry in the best possible light.

One area of the SMMT’s work I should also like to highlight is with an organisation called the Foyer Federation.  Earlier today, the SMMT Executive and I met with a group of young people, who would normally be described as being at the edges of society.

These so-called “NEETS” – not in education, employment or training – have, over the last six months, been working within our industry.

It was a proud moment seeing the positive influence we can have on young people.  If we can harness their talent, their enthusiasm, their creativity, it will be them sitting here at SMMT dinners in the years to come.

So the SMMT is doing some fantastic work on behalf of you all, including the organisation of tonight’s dinner so, on behalf of all the industry, I would like thank them for their work.

Let me end by looking to the future.

The latest SMMT forecasts suggest 2014 will see a continuation of the recovery.  We expect modest growth in both registrations and manufacturing as the big investments and model cycles crank up the pace.

The political agenda will be set by the European elections and the subsequent debate about the UK’s role in Europe.  We must participate in the debate and the SMMT will be undertaking some work to highlight the importance of Europe to our business.

We will reflect your views and ensure the government, media and the electorate understand that we operate in a global industry and that Europe is fundamental to our businesses.

We agree that it’s not perfect but we cannot abdicate our role in shaping that market and the regulations that govern our products.

A general election is only 18 months away.  Over the next year parties will be positioning themselves, identifying the issues that strike a chord with the electorate.  The SMMT will ensure the automotive industry and its interests are fundamental to all parties’ agenda.

So please, engage with us – The SMMT is the voice of the motor industry.

Make sure it is your voice too.

It’s an honour for me to be the President of the SMMT and I will continue to put all my passion into the job.

Ladies and gentlemen, thank you very much and I hope you enjoy the rest of the evening.